System, method, and business method for settling micropayment transactions to a pre-paid instrument

ABSTRACT

The invention provides a method, business method, and system for conducting micropayment transactions between consumers and merchants. A merchant offers micropayment transactions to a consumer. The micropayment transaction is authorized, and the micropayment transaction is executed between the merchant and the consumer. A value parameter associated with a prepaid instrument, such as a prepaid calling card, is decremented by an amount corresponding to the value provided by the merchant. A payment is transferred to the merchant to settle the micropayment transaction. The invention also provides a system for conducting micropayment transactions between consumers and merchants. At least one prepaid calling card is issued to a consumer in exchange for a payment from the consumer. A merchant site conducts micropayment transactions and accepts the prepaid calling card as payment. A clearinghouse receives data associated with the prepaid calling card from the merchant site and processes the data to settle the micropayment transaction. The invention also provides a business method for conducting micropayment transactions between consumers and merchants.

BACKGROUND OF THE DISCLOSURE

In recent years, new businesses have sprung up that are based almostentirely on the on-line “e-business” model. Existing brick-and-mortarbusinesses have been rapidly transforming their business models to bringtheir commerce on-line. Accordingly, purchasing goods or serviceselectronically over a wide area network, such as the World Wide Web isknown. It is also known that for financial transactions using creditcards or debit cards to pay for such purchases entails certaintransaction costs, expressed in terms of dollars per transaction. Forsales involving sufficient dollar amounts as determined by the financialcircumstances of a given business, that business can rationally incurthese transaction costs to execute the sale because the profit gained byexecuting the sale sufficiently exceeds the transaction costs.“Micropayment”=transactions, in which the economic value exchangedduring the transaction is relatively small as compared to theper-transaction costs associated with credit cards or debit cards, areknown and are in increasing demand. However, it may not be economicallyrational to use such cards for micropayment transactions because thetransaction cost may exceed the value of the underlying purchase. Inother words, why incur a $5.00 US transaction cost to execute a purchaseof goods or services with an economic value of only $0.50 US?

Because of the above circumstances, there is a continuing demand for theability to conduct and settle micropayment transactions to purchasegoods or services over the Internet and through other commercial avenuesfor reaching consumers. For example, World Wide Web sites featuringdownloading/sharing of audio or video data, downloading of magazine ornewspaper articles, on-line gaming, and on-line gambling typicallycharge relatively low fees per transaction to their customers.Generally, these fees fall in the range of $0.50 US to $10.00 US. Thesesites, and other sites similarly situated, are currently facing thechallenge of economically conducting and settling on-line micropaymenttransactions with their customers.

Several alternatives have been proposed to address this issue. Known“smart” cards (Smart Card) contain microprocessors, memory, and storedprogram code, and typically function by storing a certain value on-boardthe card. The Smart Card then enables merchants and consumers todecrement that value as purchases are made and to increment that valueas the card is “re-charged” with additional value. Smart Cards offercertain advantages that might make them suitable in certain on-linetransactions; however, the cost of these advantages may be difficult tojustify in the micropayment context. Specifically, Smart Cards generallycontain advances security features that are embedded in the technologyused to fabricate the Smart Card. These security features enableconsumers to conduct Smart Card transactions with a relatively highdegree of security. For example, the Smart Card can support the use ofpersonal identification numbers (PINs), passwords or possibly biometricdata to authenticate the consumer as a safeguard against fraud. However,this same technology makes the Smart Card relatively expensive tomanufacture and the Smart Card itself is generally not considered adisposable item. The above security features can also require themerchants to provide an expensive infrastructure such as card readers,scanners or biometric equipment at the merchant site. Also, the securityfeatures inherent in Smart Card design can prevent the Smart Card frombeing used anonymously, which can be important to consumers whenconducting some on-line transactions. Further, the above securityfeatures can entail infrastructure and transaction costs that aresufficiently high to discourage use of Smart Cards for micropaymenttransactions.

Many websites conduct on-line business with consumers by enabling themto charge purchases to bank-issued credit cards, or by authorizing debitcard transactions to cover those purchases. However, banks typicallylevy a transaction fee for settling such purchases, and once again,these per-transaction fees can be sufficiently high to discourageacceptance of conventional credit or debit cards to conduct and settlemicropayment transactions. Further, the use of credit cards on-lineentails risk that sensitive information such as account numbers and/orexpiration dates may be misappropriated and used in subsequentfraudulent transactions. Unwinding such fraudulent transactions imposessignificant expense and inconvenience upon any merchants and banksinadvertently involved in those fraudulent transactions, not to mentionthe consumer that legitimately owns the account. Should the credit cardaccount be compromised by fraud, the consumer and/or bank faces riskbounded only by the credit limit on the account which could be as highas $100,000.00 US. Although, for example, VISA® and MasterCard® limitconsumer risk to $50.00, the issuing bank would face the rest of therisk up to the credit limit on the given card. Also, credit cardtransactions are typically not anonymous transactions because of theintrinsic nature of how credit cards are issued and processed. This lackof anonymity and related privacy concerns can discourage credit cardpurchases in some types of on-line commerce.

Specialized cards with matching devices and networks have also beenproposed as well. However, these proposals can entail significantinfrastructure costs such as the cost of producing the specialized card,of producing and installing card readers or other specialized hardwareat the physical location of each retailer and/or consumer participatingin the network and of implementing and maintaining the network itself.These infrastructure costs translate into high per-transaction coststhat can limit use of such cards and networks for micropaymenttransactions and also discourage additional on-line merchants fromjoining the network by increasing the start-up costs associated withjoining the network. Also, such specialized cards and networks typicallydo not provide anonymity to consumers using such cards and networks.

As the preceding discussion illustrates, there exists a continuing needfor systems, methods and business methods that enable execution andsettlement of micropayment transactions. Such systems, methods andbusiness methods would preferably entail minimal transaction costs,capitalize on existing infrastructure rather than necessitating newinfrastructure, promote consumer anonymity, and expose consumers to (atmost) a fixed and minimal risk of theft or misappropriation.

SUMMARY OF THE DISCLOSURE

The invention provides a method for conducting micropayment transactionsbetween consumers and merchants, perhaps using a retail intermediary. Insummary, the method comprises the following steps. A merchant offersmicropayment transactions to a consumer, during which transaction amerchant provides value to the consumer. The consumer presents data froma prepaid instrument, such as a prepaid calling card, or possibly theprepaid calling card itself, as payment for the value. The micropaymenttransaction is authorized for settlement and is executed to completionbetween the merchant and the consumer. A value parameter associated withthe prepaid calling card is decremented by an amount corresponding tothe value provided by the merchant. A payment is transferred to themerchant to settle the micropayment transaction.

The invention also provides a system for conducting micropaymenttransactions between consumers and merchants with the system comprisingthe following components. At least one prepaid calling card is issued toa consumer in exchange for a payment from the consumer. A merchant siteconducts micropayment transactions and accepts the prepaid calling cardas payment for the micropayment transaction, during which transactionthe merchant provides value to the consumer and the consumer presents aprepaid calling card as payment for the value. A clearinghouse receivesdata associated with the prepaid calling card from the merchant site andprocesses the data to settle the micropayment transaction.

Finally, the invention provides a business method for conductingmicropayment transactions between consumers and merchants, with thebusiness method comprising the following steps. A merchant offersmicropayment transactions to a consumer, during which transaction themerchant provides a first amount of value to the consumer and theconsumer presents data from a prepaid calling card as payment for thefirst amount of value. A decrement of a value parameter associated withthe prepaid calling card by the first amount of value is authorized andthe micropayment transaction is executed. The value parameter isdecremented by the first amount of value. A payment having a secondamount of value is collected from an entity holding the settlementfunds. The first amount of value is greater than the second amount ofvalue thereby generating a first profit to the issuing entity equal tothe difference between the first amount of value and the second amountof value. The payment is routed to a clearinghouse entity for ultimatelysettling the micropayment transaction. A payment of a third amount ofvalue is transferred from the clearinghouse entity to the merchant tosettle the micropayment transaction. The second amount of value ispreferably greater than the third amount of value, thereby generating asecond profit to the clearinghouse entity equal to the differencebetween the second amount of value and the third amount of value.

BRIEF DESCRIPTIONS OF THE DRAWINGS

FIG. 1 is a flowchart of the overall processing flow performed by anillustrative embodiment of the method and business method of theinvention.

FIG. 2 is a block diagram of the various means by which a merchant canoffer micropayment transactions to consumers.

FIG. 3 is a flowchart of the overall processing flow shown in FIG. 1,further illustrating the issuance of prepaid calling cards.

FIG. 4 is a flowchart illustrating additional aspects of the offeringstep, the authorization step, and the execution step as shown in FIG. 1.

FIG. 5 is a flowchart illustrating additional aspects of the authorizingstep shown in FIG. 1.

FIG. 6 is a block diagram of an illustrative structure of a databasesupporting the authorization step shown in FIG. 1.

FIG. 7 is a block diagram of a system constructed according to anillustrative embodiment of the invention.

FIG. 8 is a block diagram of a variation of the system shown in FIG. 7constructed according to an alternate embodiment of the invention.

FIG. 9 is a block diagram of an example data structure supporting thesettlement step as shown in FIG. 1.

FIG. 10 is a flowchart illustrating processing specific to the businessmethod of the invention, especially various aspects of the settlementstep 18 shown in FIG. 1.

FIG. 11 illustrates an example micropayment transaction conductedbetween consumers and merchants in accordance with the invention.

FIG. 12 is a flowchart illustrating a method of settling a micropaymenttransaction conducted between a consumer and a merchant using a prepaidcalling card presented by a consumer.

FIG. 12A is a flowchart illustrating a processing flow performed duringthe response step illustrated in FIG. 12

FIG. 13 is a flowchart illustrating a first processing flow performedduring the dispositioning step shown in FIGS. 12 and 12A.

FIG. 14 is a flowchart illustrating a second processing flow performedduring the dispositioning step shown in FIGS. 12 and 12A.

FIG. 15 is a flowchart illustrating processing flow executed while theinvention processes a request to increment the value remaining parameterassociated with a given prepaid calling card.

FIG. 16 is a flowchart of processing flow performed during activation ofa prepaid calling card.

FIGS. 17 and 18 are block diagrams of user interfaces constructedaccording to the invention.

FIG. 19 is a combined block diagram and flow chart illustrating a methodand mechanism for providing and using a combined phone/internet prepaidcalling card (P/I card).

FIG. 19 a is a diagram of a homepage accessible from an illustrativemerchant website provided according to the present invention.

FIG. 19 b is a diagram of an illustrative webpage accessible from thehomepage shown in FIG. 19 a, should the consumer select the “Photos”link shown therein.

FIG. 19 c is a diagram of an illustrative webpage accessible from thewebpage shown in FIG. 19 b, should the consumer select one of the photolinks shown therein, such as the “West in San Antonio” link.

FIG. 19 d is a diagram of an illustrative webpage accessible from thewebpage shown in FIG. 19 a, should the consumer select the “Articles”link shown therein.

FIG. 19 e is a diagram of an illustrative webpage accessible from thewebpage shown in FIG. 19 a, should the consumer select the “Games” linkshown therein.

FIG. 19 f is a diagram of an illustrative webpage accessible from thewebpage shown in FIG. 19 a, should the consumer select the “Portal” linkshown therein.

FIG. 19 g is a diagram of an illustrative webpage accessible from thewebpage shown in FIG. 19 f, should the consumer select the “ViewTransaction History” link shown therein.

FIG. 19 h is a diagram of an illustrative webpage accessible from thewebpage shown in FIG. 19 f, should the consumer select the “ViewBalance” link shown therein.

FIG. 19 i is a diagram of an illustrative webpage accessible from thewebpage shown in FIG. 19 f, should the consumer select the “Add Units toCard” link shown therein.

DETAILED DESCRIPTION OF ILLUSTRATIVE EMBODIMENTS

Overview of the Invention

The invention provides systems, methods and business methods forsettling at least one micropayment transaction between at least oneconsumer and at least one merchant over a wide area network using aprepaid instrument. The prepaid instrument may be, for example, aprepaid calling card or a prepaid phone card, as those terms areunderstood in the art. Any prepaid instrument that is associated with anaccount containing a decrementable value may be suitable for practicingthe invention.

Prepaid calling cards are well known and when a prepaid calling card isissued, an account is created that stores a value parameter associatedwith the prepaid calling card. A PIN is associated with this account forsecurity, and a card is manufactured that corresponds to this account.The card typically bears a toll-free access number that the consumerdials to access the network, along with the PIN, which the consumer mustenter to access the phone network and place telephone calls. The prepaidcalling cards are issued and sold in various denominations of valueexpressed in terms of either time or currency. By purchasing the prepaidcalling card, the consumer obtains the right to use this value. Inconventional use of prepaid calling cards, the consumer accesses thatvalue by dialing the telephone number shown on the card, entering thePIN, and then dialing a target telephone number. As the consumer makesthose calls, value is deducted from the account associated with theconsumer's prepaid calling card. When no value remains in the account,the consumer can make no further calls, and the prepaid calling cardessentially expires.

FIG. 19 is a combined block diagram and flow chart illustrating a methodand mechanism for providing and using a combined phone/internet prepaidcalling card (P/I card). This card can be provided in either physical orelectronic format and can use a card Identifier/Personal IdentificationNumber (ID/PIN) code combination to manage tracking units that are tiedto a cash value. These units could be used as traditional pre-paid phoneminutes or as monetary value used to conduct micropayment transactionsto purchase products or services from participating merchants.

As shown at block 201, a consumer can acquire a P/I card from atraditional point-of-sale (POS) outlet, a web site, or as part of aclub-type membership. Other options for obtaining the card are discussedabove.

As shown at block 202, the P/I card comes with a source identifier, suchas a “1-800” access number or a club identifier (ID), and a PIN codeassociated with the card. In the case of a club-based card, it may benecessary for a member to use all 3 items (800#, club ID, and PIN) touse the card for pre-paid phone time.

As shown at block 203, there are 2 primary usage models for the P/Icard:

-   -   Pre-Paid Phone Usage—This is the standard existing model with        the necessary infrastructure already in place. Example        transactions here include offering consumers access to the        public telephone network to make telephone calls. The units on        the card have a predetermined value and various per-minute rates        are charged based on call type (domestic, international that        varies by country, etc).    -   Product Purchase Usage—In this model, the invention extends the        pre-paid calling card infrastructure to support consumer        purchases of goods/services through micropayment transactions.        In these transactions, the merchant is offering goods/services        other than access to the public telephone network for making        telephone calls. For a given micropayment transaction, the        merchant would determine the number of units that it would        charge to fulfill that micropayment transaction (play game, view        article, 1 day memberships, etc). This could be viewed in the        same manner as international calls where there is a premium for        that service versus domestic. Based on its contract with the        card issuer and/or the settlement clearinghouse, a given        merchant would know its transaction cost associated with each        unit (ex: $0.05) and could set retail pricing as it sees fit.

As shown at block 204, if the consumer uses the card to pay fortelephone calls, the consumer interacts with an existing InteractiveVoice Response (IVR) platform. The IVR validates the pre-paid card andtracks the available minutes remaining on the card. It also connects thecaller with the number they are calling and notifies the caller wheretime has expired.

As shown at block 205, several channels are available to use the card toconduct micropayment transactions, as discussed above. The web merchantembodiment is described here, but the same features would apply for IVRand the other P/I card sales channels. The web site would include thepayment option for P/I cards, and the logic described could be providedto the merchant to embed on the site. This logic would provide securitysupport that is similar to that offered during credit card transactionsconducted on the site. The website would present the cost of thegoods/services being offered to the consumer, in terms of generic valueunits, minutes, or otherwise. The consumer would enter his/her ID/PINand submit the proposed transaction. A message would be sent to the cardprocessor to verify that the P/I card held enough units to authorize thetransaction.

If the P/I card holds enough units to authorize the transaction, thecard would be decremented and the service provided or product salecompleted, while capturing any other personal information from theconsumer that is necessary for fulfillment. The transaction is thenapproved for eventual settlement.

If the P/I card did not contain enough value to complete thetransaction, the consumer could be redirected to another site, such asby a link to a web portal, and be offered the opportunity to rechargethe card or to purchase a new card. The fulfillment of this recharge orrepurchase transaction could be done immediately via a credit cardpayment from the consumer. All of the above steps would also work underthe club model, but the consumer would go to the club provider (forexample, the Yahoo® website) and ask that additional units be charged tothe payment mechanism associated with the club account. Suitable paymentmechanisms could include charges to a credit card or debit account, orother transfers via an automated clearinghouse (ACH) transaction.Typically, the club provider may require a minimum recharge or purchaseamount to justify a credit card charge. As an incentive, the merchantcould be paid a commission for recharge/repurchase transactionsgenerated from their sites, which commission would be included in thesettlement process.

A merchant could also increment the value associated with cards as partof an incentive or retention program using minutes that the merchantpurchases wholesale. For example, if a consumer played 9 games at 10units per game, and they received one play for free, this free playwould be accomplished by incrementing the card for 10 units. Incrementscould also be used as an incentive for visiting certain parts of theInternet to view new offers.

At block 206, the card management database provides a master databasethat contains information on every outstanding P/I card including theamount of available or remaining value units associated with each P/Icard. The card management database houses the results of theincrement/decrement transactions described above. This infrastructurealready exists and operates to support telephone calls placed againstpre-paid calling cards, and need only be extended as describedabove/below to support micropayment transactions authorized and settledagainst pre-paid calling cards.

At block 207, a card transaction history file or database contains theindividual transactions that are generated when a given card is used foreither placing telephone calls or conducting micropayment transactions.For placing phone calls, the card transaction history file would containfields for storing information such as date, time, number dialed, lengthof call, and number of units spent. For conducting micropaymenttransactions, this card transaction history file would contain fieldsfor storing information such as date, time, and a merchant identifier.Both types of history file entries would preferably have the ID/PINassociated with them. These entries would be used to allow consumers tocheck their own usage and also to support the settlement process.

At block 208, the settlement system receives records of cardtransactions from the card history file as input and generates paymentsto the merchants corresponding to those transactions. These transactionscould be settled at chosen intervals. For example, in a weekly paymentmode, the settlement system would input the value units associated witha specific merchant ID and calculate the payment due that merchant bymultiplying those value units by the agreed-upon monetary conversionrate for those value units. For example, assuming a conversion rate of$0.05 per value unit, if a merchant's game site accrued 100,000 valueunits, then the merchant would receive a settlement payment of $5000dollars. Included in the settlement payment would be any commissions duethe merchant for selling value units, and deducted from that paymentwould be the value corresponding to any incentives given by themerchant.

At block 209, the Web portal can provide a number of functions. The webaddress of this portal could be pre-printed on every card to notify theconsumer which sites accepted the P/I card for micropaymenttransactions. As discussed in more detail below, the cards could beissued with an associated rating with specific ratings chosen from asystem such as G, PG, R and XXX. A card issued with a given rating canbe accepted only by sites having the rating on the card or a lowerrating. Point-of-sale merchants could only sell XXX cards to consumersof a given age similar to how tobacco and alcohol products are currentlysold. At the portal, consumers could buy cards, recharge cards, checkbalances remaining on a given card, view where value units associatedwith a given card have been spent (to promote parental control oversites accessed by their children). Visiting consumers can also generaterevenue for the entity hosting the web portal by visiting sitesadvertised on banners posted at the portal. Since consumers at the webportal have money in-hand in the form of the P/I card, and may bepre-dispositioned to spend, these banner ads could command premiumadvertising rates. The portal could also charge a fee to merchants formanaging any incentive, loyalty, or bonus programs operated by themerchant.

Method of Conducting Micropayment Transactions

FIG. 1 is a flowchart of the overall processing flow performed by anillustrative embodiment of the method and business method of theinvention. The invention provides a method for conducting micropaymenttransactions between consumers and merchants, and comprises thefollowing steps.

As shown at block 10, a merchant offers micropayment transactions toconsumers, during which transactions the merchant provides value to theconsumers and the consumers presents data from prepaid calling cards aspayment for that value. “Merchant” in the context of this descriptionrefers to any provider of good and/or services, and “consumer” refers toany recipient of good and/or services. “Value” in the context of thisdescription refers to any goods and/or services provided by themerchant, and this value may be measured in either monetary ornon-monetary terms.

As shown at block 12, a proposed micropayment transaction is authorizedfor settlement, and at block 14, assuming the proposed micropaymenttransaction is authorized, the micropayment transaction is executed andcompleted between the merchant and the consumer, at which time the valuechanges hands between merchant and consumer. At block 16, a valueparameter associated with the prepaid calling card is decremented by anamount corresponding to the value provided by the merchant. At block 18,a payment is transferred to the merchant to settle the micropaymenttransaction.

FIG. 2 is a block diagram of various alternatives by which a merchantcan offer micropayment transactions to consumers, shown as block 10 inFIG. 1. The merchant may offer these micropayment transactions toprospective consumers using any one or more of the followingalternatives, which are shown for example and not to limit theinvention. Other alternatives not shown here may be appropriate in givenapplications. In block 20, the merchant may operate a network noderesiding on a network that couples the merchant and the consumer. Anexample network might be a merchant website hosted at a given address ona wide area network such as the Internet or World Wide Web.

As shown in block 22, the merchant might operate a teleservices facilityeither in-house or outsourced to a third party to handle incoming oroutgoing calls from/to consumers. This teleservices facility would becoupled to a public telephone network to which the consumer has access.As shown in block 24, the merchant might also maintain a point-of-saleterminal located at a storefront that enables the consumer to conductmicropayment transactions for any goods and/or services offered by themerchant. In another alternative, as shown in block 26, the merchantmight operate a vending machine, such as a drink or snack machine, thatis coupled to a wired or wireless communications network to which theconsumer has access.

The method of the invention can operate with either conventionalpre-paid calling cards as they are known in the art, or the inventioncan be extended to issuing the cards to consumers, either free of chargeor in exchange for a payment from the consumers. See FIG. 3, which is aflowchart of the overall processing flow shown in FIG. 1, illustratingthe issuance of prepaid calling cards as initial step 30. FIG. 4 is aflowchart illustrating additional aspects of the offer step 10, theauthorization step 12, and the execution step 14 as shown in FIG. 1.Within the scope of the invention, the merchant may offer differenttypes of micropayment transactions to two or more different types ofconsumers. For example, returning briefly to the website embodimentdiscussed above, minors may be legally barred from accessing certaingambling, gaming, or other websites. Accordingly, the merchant mayrestrict access to certain types of transactions based on the age of theprospective consumer. In this example, the merchant offers a first type(adult) of micropayment transactions strictly to a first type (adult) ofconsumers. As another example, a children's-only card might be offeredto enable children to access child-oriented sites. Other examplesinclude issuing prepaid calling cards that enable the consumer to accessspecific sites or to play specific games on-line.

To support the merchant in the effort to differentiate among prospectiveconsumers, an issuer of pre-paid calling cards can distribute at leasttwo types of prepaid calling cards. Each type of prepaid calling card isassociated with respective types of consumers having proper access torespective types of micropayment transactions. As shown at evaluationblock 40, the distinction between these two types of cards andmicropayment transactions can be made on the basis of age or any otherapplicable criterion. Age is shown merely for example. The result ofevaluation block 40 sends program control either to blocks 10 a, 12 a,and 14 a, or to blocks 10 b, 12 b, and 14 b. At blocks 10 a and 10 b,the appropriate types of micropayment transactions are offered to theappropriate consumers; at blocks 12 a and 12 b, the appropriatemicropayment transactions are authorized; and at blocks 14 a and 14 bthey are executed and completed with the appropriate consumers. Block 43gathers program control and passes it back to block 16 in FIG. 1 toproceed with processing the transaction.

While FIG. 4 illustrates two types of transactions and consumers, itshould be understood that the scope of the invention includes two ormore types or classifications of transactions. Accordingly, theinvention is not limited to the embodiment shown in FIG. 4.

Once the prepaid calling card is issued to the consumer, and theinfrastructure required to offer the transactions is in place, themerchant and the consumer can execute micropayment transactions. Wheredifferent types of micropayment transactions are offered, the type ofmicropayment transaction sought by the consumer is evaluated orvalidated (block 40) against the type of prepaid calling card presentedby the consumer to ensure that the consumer has proper access to thetransaction. This validation step is a preliminary form of transactionauthorization, applicable where access to certain transactions isrestricted according to the embodiment shown in FIG. 4.

Returning briefly to FIG. 1, once the transaction is underway, itpreferably is authorized (step 12) before being allowed to execute tocompletion (step 14), otherwise the merchant risks being defrauded byaccepting a payment from a calling card that has no value associatedwith it.

The steps of authorizing (block 12) and the step of decrementing (block16) are preferably performed in real-time from the perspective of theconsumer and merchant, to avoid frustrating the consumer and/or themerchant, and to prevent duplicate charges from being appliedfraudulently against a given remaining card balance. “Real-time” as usedin the context of this description refers to a delay while theauthorizing and decrementing are performed that does not undulyinterfere with the flow of the given transaction. As would be understoodby those skilled in the art, this standard will vary depending on thenature and circumstances of the given transaction. For example, afive-second delay while conducting a telephone transaction might beconsidered real-time, while the same delay during a website transactionmight not.

FIG. 5 is a flowchart illustrating additional aspects of the authorizingstep 12 shown in FIG. 1. Typically, as shown in block 50, authorizationproceeds with the merchant capturing information or data from theprepaid calling card, such as a prepaid calling card number, PIN, orother data necessary to determine whether the prepaid calling card hasvalue associated with it. As shown in block 51, the merchant accesses adatabase to retrieve the value parameter associated with the prepaidcalling card presented by the consumer, with the data captured from theprepaid calling card serving as an index into the database.

FIG. 6 is a block diagram of an illustrative structure of a database 60supporting the authorization step 12 shown in FIG. 1. The database 60 asshown includes calling card number field 62, PIN field 64, and valueremaining parameter field 66. The clearinghouse 74 receives data 68extracted from calling card 73 presented by consumer 76. Data 68typically includes the prepaid calling card number 62 and the PIN field64. The clearinghouse 74 accesses the database 60 using the data 68 fromthe prepaid calling card 73 as an index into the database 60 to obtainthe remaining value parameter 66 associated with the prepaid callingcard 73. The clearinghouse 74 compares the remaining value parameter 66to the unit value to be settled to the merchant 72, converting asnecessary to gain equivalency between the two values being compared.This unit value corresponds to the value of the goods/services providedby the merchant 72 during the micropayment transaction. However, thisvalue need not be the exact amount tendered by the merchant 72,depending on the business arrangements negotiated between the merchant72 and the clearinghouse 74. The clearinghouse 74 will either determinethat the remaining value parameter 66 is sufficient to approve themicropayment transaction for settlement, or determine that the remainingvalue parameter 66 is insufficient to approve the micropaymenttransaction for settlement and decline settlement accordingly. As notedabove, if the transaction is declined, the consumer 76 can be offeredthe opportunity to recharge the prepaid calling card 73, or purchase anew one.

Returning to FIG. 5, once the appropriate entry in the database islocated using the index, the field entries corresponding to that entryare extracted, as shown in block 52. The field entry of main interest isthe value remaining parameter associated with the prepaid calling card,which indicates how many units of value are associated with the prepaidcalling card, and whether the proposed micropayment transaction can beauthorized

In block 53, the merchant, or an entity or process acting on behalf ofthe merchant, compares the value provided by the merchant to the valueparameter associated with the prepaid calling card, as shown by thedatabase, to authorize or decline the micropayment transaction. As shownin block 54, if the value parameter associated with the prepaid callingcard is sufficient to cover the payment sought by the merchant, then themicropayment transaction is authorized and execution of the micropaymenttransaction proceeds (block 14). Otherwise, if the value parameterremaining on the prepaid calling card is insufficient to cover themicropayment transaction for settlement, the micropayment transaction isdeclined (block 56). At this point, the proposed transaction can beterminated, or the consumer can be given an opportunity to “recharge”his/her prepaid calling card with additional value or to purchase a newprepaid calling card. For example, if the merchant is operating a webpage, the consumer might be redirected to a webpage offered by theissuer to either recharge or repurchase.

Returning to FIG. 1, if the authorization step 12 approves or clears thetransaction for execution and eventual settlement, the transactionexecutes and closes (block 14), and the value parameter associated withthe prepaid calling card is decremented by an amount corresponding tothe value provided by the merchant (block 16). Where the transaction isconducted using a first unit of value, and a second unit of value isassociated with the prepaid calling card, it is necessary to exchange orconvert the transaction unit of value into the unit of value associatedwith the prepaid calling card. For example, the value associated withprepaid calling cards may be measured in units of currency, in units ofphone time or in generic units of value that can be converted to time orcurrency equivalents by using negotiated conversion factors. If thevalue of the micropayment transaction is measured in dollars and thevalue remaining on the calling card is measured in minutes, then aconversion factor must be applied to settle the micropayment transactionagainst the prepaid calling card. The precise conversion factor appliedis typically negotiated among the prepaid calling card issuer, themerchant, and the clearinghouse that ultimately settles thetransactions. However, these conversions may not necessarily betime-to-money conversions; if the prepaid calling card and themicropayment action are measured in different currencies, one must beconverted into the other to settle the transaction.

ADVANTAGES

The invention as described herein offers several key advantages toconsumers. First, it provides an alternative avenue that enablesconsumers to expend unused value associated with their cards orinstruments, rather than allowing that value to expire worthless. Shouldthe consumers not wish to place phone calls, he/she can extract thatvalue by conducting micropayment transactions for goods/services.Second, the consumers can freely transfer the card or instrument toanother while exposing himself/herself to only limited liability.Specifically, any liability associated with such transfers is limited tothe remaining value associated with the card or instrument. In contrast,transferring a credit card could expose the transferor to liability upto the credit limit of the card. Third, consumers of prepaid instrumentsor calling cards may transfer unused value associated with their cardsto brokerages, possibly for consideration depending on the amount ofvalue left on such cards. The brokerages could in turn transfer thisunused value to other consumers. Fourth, conducting transactions usingthe instruments/cards provided according to the invention can providethe consumer with a much greater degree of anonymity than would creditcards, debit cards, or Smart Cards.

The invention also provides advantages to merchants. First, consumersmay hesitate to provide credit card numbers over networks, such as theInternet or the public telephone network. However, the alternativepayment avenue provided by the invention may enable the merchant toreach those reluctant consumers by lowering the risk faced by thoseconsumers. Therefore, the merchant can expand its consumer base becausemore visiting consumers become purchasing consumers. Second, themerchant is virtually assured of payment (as discussed more fullybelow), thereby reducing or eliminating collection issues related to baddebt or fraudulent transactions.

Another significant advantage of the invention is that the givenmicropayment transaction can be executed without the consumer evenhaving physical possession of the prepaid calling card during executionof the micropayment transaction. Indeed, the issuer of the card need noteven issue a physical card to the consumer. The issuer could send thecard number and PIN to the consumer via e-mail, for example. Forexample, if the consumer has memorized the telephone access number andPIN, he/she can provide the data from his/her own memory toauthorize/execute the micropayment transaction without producing thecard. In contrast, if the methods discussed above in the Background areemployed (Smart Cards, credit cards, debit cards, or the like), theconsumer typically must produce the physical card itself to have thecard read and processed by specialized, expensive hardware such as cardreaders and scanners. However, the invention avoids this expensivehardware by capitalizing on the largely existing infrastructure thatcurrently processes prepaid calling cards. In most cases, the method ofthe invention can execute a given micropayment transaction withoutmachine access to any data physically residing on the prepaid callingcard.

Another significant advantage of the method of the invention is lowerper-transaction costs. As also discussed above in the Background, SmartCards, credit cards, debit cards or the like are typically not suitablefor conducting micropayment transactions because the per-transactioncosts associated with such cards tends to exceed the relatively smallvalue exchanged or the profit margin of the merchant during amicropayment transaction. Two main factors drive the high transactioncosts associated with these cards. First, the risk of fraud, and theconsiderable cost of unwinding transactions involving fraudulent use ofsuch cards, is factored into per-transaction cost. Second, assuming theconsumer presenting the card is authorized to use the card, thereremains the risk that that person will default on his/her obligation torepay the bank that issued the card. This bad debt risk is similarlyfactored into the per-transaction cost, typically surfacing in theinterchange fees charged by banks.

Settling micropayment transactions to prepaid calling cards reducesper-transaction cost by avoiding both of the above factors. Firstregarding fraud risk, prepaid calling cards as issued are associatedwith a limited, relatively small quantum of value, especially ascompared to credit cards or debit cards. Even if the prepaid callingcard is stolen or lost, the risk of fraud is capped at the relativelylow maximum value (in either currency or calling time) associated withthe card. In contrast, should a credit card be stolen or lost, the riskof fraud is capped only by a relatively high credit limit associatedwith the card. While, as noted above, the consumer or other legitimateholder of the credit card may not face this full risk, the issuing bankand merchant most likely do and this risk is factored into the issuingbank's cost of doing business. In the case of debit cards, the risk offraud is capped only by the extent of funds on deposit in the account towhich the debit card is linked. Thus, while the fraud risk associatedwith credit/debit cards is significant and possibly indefinite, thefraud risk associated with prepaid calling cards is definite and fixedat a relatively low level.

Second, regarding bad debt or credit risk, prepaid calling cards avoidthis risk altogether because of the intrinsic nature of how they areissued and sold. There is no risk of bad debt because there is no debtthat can go bad; the funds against which the micropayment transaction isto be settled were collected from the consumer when he/she bought theprepaid calling card. Those funds are on deposit with either the entitythat sold or issued the prepaid calling card, or another intermediary.Because the risk of fraud is minimal and the risk of bad debt isvirtually non-existent with prepaid calling cards, they offer the lowper-transaction costs that are essential to conducting micropaymentcommerce.

Once the transaction is authorized and completed, a payment istransferred to the merchant to settle the micropayment transaction, asshown in block 18 of FIG. 1. If the entity that originally issued andsold the prepaid calling card to the consumer still holds the consumer'spayment, then the micropayment transaction can be settled by routing apayment from the issuing entity directly to the merchant. However, athird party clearinghouse or other intermediary may be responsible fortracking usage and ownership of the prepaid calling card, or otherwiseis holding the funds originally paid for the prepaid calling card. Inthis case, the micropayment transaction can be settled by routing apayment from that third party clearinghouse either directly orindirectly to the merchant.

To reduce per-transaction costs, the method of the invention canaggregate multiple micropayment transactions involving prepaid callingcards issued by a given calling card issuer into a composite settlementtransaction to be settled against the given calling card issuer, oragainst a given clearinghouse. See discussion of FIG. 9 below in theSystem Implementation section. This enhancement reduces per-transactioncosts by processing transactions logged against a given issuer orclearinghouse in bulk rather than piecemeal. To reduce per-transactioncosts even farther, the invention can aggregate multiple micropaymenttransactions involving prepaid calling cards issued by a given callingcard issuer and involving a given merchant into a composite settlementtransaction to be settled against the given calling card issuer to thegiven merchant.

System Implementation

FIG. 7 is a block diagram of a system 70 provided to conductmicropayment transactions between consumers 76 and merchants 72according to an illustrative embodiment of the invention. The system 70comprises the following.

At least one prepaid calling card 73 is issued to a consumer 76, who maypurchase the prepaid calling card 73 or who may receive the prepaidcalling card 73 for free as a demonstration item or promotion sponsoredby a merchant 72 or an issuing entity 71. The issuing entity 71 canissue the prepaid calling cards 73 to consumers 76 in exchange forpayments from the consumers 76. The funds resulting from these purchasescan be held on deposit either by the issuing entity 71, or by anotherentity acting on behalf of the issuing entity 71.

The issuing entity 71 can issue at least two different types of prepaidcalling cards 73 to at least two different types of consumers 76.Specifically, as discussed above in connection with FIG. 4, the issuingentity 71 can issue at least two types of prepaid calling cards 73 to atleast two different types of consumers 76 based on the age of theconsumers 76, or other applicable criteria, as discussed above. In thismanner, for example, a parent could control which micropaymenttransactions a child could access, by regulating which type of card theparent provides the child.

A merchant or merchant site 72 conducts micropayment transactions withconsumers 76 and accepts the prepaid calling card 73 as payment for themicropayment transactions. During these transactions, the merchantprovides value to the consumer 76 and the consumer 76 presents data froma prepaid calling card 73 as payment for the value to have a proposedmicropayment transaction authorized for settlement. The specific type ofmerchant site 72 offered to consumers 76 can include the examplesillustrated in FIG. 2 and discussed above.

Turning to the FIG. 4 embodiment, wherein pre-paid calling cards 73 andoffered transactions are classified, the merchant site 72 offers atleast two types of micropayment transactions to respective types ofconsumers 76 based on, for example, the age of the consumers 76 or othercriteria. A first type of micropayment transaction can be offeredstrictly to a first type of consumers 76, depending on the criteriachosen for differentiation. By checking the type of prepaid calling card73 presented by the consumer 76, the merchant site 72 can validatewhether a given micropayment transaction is appropriate for a givenconsumer 76, thereby helping to prevent improper consumer access tomicropayment transactions.

The merchant site 72 accepts data from the prepaid calling card 73 to beused to settle the micropayment transaction. Typically, this dataincludes the data necessary to enable the micropayment transaction to beauthorized and settled against the remaining value associated with theprepaid calling card 73 presented by the consumer 76. In mostapplications, the prepaid calling card number and PIN associated withthe prepaid calling card will suffice.

As discussed above, the merchant site 72 can execute the givenmicropayment transaction without the consumer having physical possessionof the prepaid calling card. If the consumer has memorized the accessnumber and PIN, then the consumer need not physically possess theprepaid calling card. Further, the merchant site can be adapted toexecute a given micropayment transaction without machine access to anydata physically residing on the prepaid calling card, if the consumercan recite the access number and PIN from memory. This advantage can bebeneficial if a prepaid calling card having value remaining on it islost or misplaced, in that the consumer can still use it to conductmicropayment transactions. This advantage also avoids the expenseassociated with Smart Cards or other cards having on-board processingchips, memory, and/or magnetic strips, and also eliminates the need toemploy hardware such as card or magnetic strip readers at the merchantlocations. In the context of Web transactions, the retail consumer neednot have such hardware connected to his/her personal computer to conductmicropayment transactions, which is a key advantage the inventionprovides especially as compared to Smart Cards.

A clearinghouse 74 receives data associated with the prepaid callingcard 73 from the merchant site 72, and processes the data to settle themicropayment transaction. According to various embodiments of theinvention, the issuing entity 71 can be separate from the clearinghouse74 (FIG. 7), or the issuing entity 71 can be functionally integratedinto the clearinghouse 74 (FIG. 8). In both the FIG. 7 and FIG. 8embodiments, the finds resulting from any sale of the prepaid callingcard may be held on deposit with either the issuing entity 71 or theclearinghouse 74. The FIG. 8 embodiment might be appropriate, forexample, where one given business entity decides both to issue and toadminister a prepaid calling card 73. This card 73 might be aspecial-purpose card created, branded, and promoted specifically topractice the invention, or a general-purpose card used to practice theinvention.

If the clearinghouse 74 authorizes or approves the transaction, theclearinghouse 74 can transfer a payment to the merchant 72 to settle thetransaction. If the clearinghouse 74 holds the settlement funds, it canoriginate the payment to the merchant 72. If the settlement funds, whichmay be the funds originally paid by the consumer 76 to purchase theprepaid calling card, are still held by the issuing entity 71, theclearinghouse 74 can order a payment from the issuing entity 71 directlyor indirectly to the merchant 72. On the other hand, if another thirdparty holds the settlement funds, the clearinghouse 74 can order that asettlement payment be sent indirectly to the merchant 72 through atleast one intermediary.

FIG. 9 is a block diagram of an illustrative data structure 90supporting the settlement step 18 shown in FIG. 1. Respectivetransactions to be settled are represented by columns 92 a, 92 b, 92 c,92 d, and 92 e. The data structure contains rows for various datarelevant to each transaction, such as a transaction ID field 94 a, amerchant ID field 94 b, a prepaid calling card number field 94 c, a PINfield 94 d, and an issuer ID field 94 e. Data structure 90 as shown inFIG. 9 is populated with sample data chosen strictly for illustration,and not to limit the invention.

To maximize efficiency during the settlement process, and to minimizeper-transaction cost, the clearinghouse 74 can use fields 94 a-94 e togroup multiple micropayment transactions 92 a-92 e into aggregatedsettlement transactions 96 a and 96 b involving prepaid calling cardsissued by a respective calling card issuer. Aggregated settlementtransactions 96 a and 96 b can then be settled in bulk against the givencalling card issuer 71, or whoever else holds the settlement funds.

As a further optimization, the clearinghouse 74 can group multiplemicropayment transactions 94 a-94 e not only by the calling card issuer71, but also by the merchant 72 receiving settlement, into aggregatedtransactions. This optimization streamlines the settlement process basednot only on the source of the settlement funds, but also on therecipient of the settlement funds. By settling these aggregatedtransactions in bulk rather than piecemeal against the given callingcard issuer 71, the lower cost of settling the bulk transaction isspread among the several transactions comprising the bulk, therebylowering the per-transaction settlement cost. The invention alsocontemplates allowing unsettled transactions to accumulate afterexecution until enough have accumulated to allow aggregating them in themost cost-efficient manner, so as to minimize per-transaction settlementcosts.

FIGS. 6 and 9 illustrate non-limiting embodiments of data structuressuitable for practicing the invention. However, it will be understoodthat the logical layout, record and field format, variable names and thelike may be varied by those skilled in the art without departing fromthe scope of the invention.

Business Method

FIG. 10 is a flowchart illustrating processing specific to the businessmethod of the invention, especially various aspects of the settlementstep 18 shown in FIG. 1. Steps 10, 12, 14, and 16 remain as illustratedin FIGS. 1-10 and as discussed above.

Returning briefly to FIG. 1, a merchant 72 offers at least onemicropayment transaction to a consumer 76, during which transaction themerchant 72 provides a first value to the consumer 76 and the consumer76 presents data from a prepaid calling card 73 as payment for the firstvalue (step 10). A proposed micropayment transaction, and acorresponding decrement of a value parameter associated with the prepaidcalling card between the merchant 72 and consumer 76 is authorized (step12), and the micropayment transaction is executed (step 14). The valueparameter is decremented by the first value (step 16).

Turning to FIG. 10, in step 102, a payment having a second value iscollected from an entity holding the settlement funds, which may beissuing entity 71, who issued the prepaid calling card 73 to theconsumer 76. Alternatively, the payment can be collected from anotherentity holding the settlement funds on behalf of the issuing entity 71.Typically, when the consumer initially purchases the prepaid callingcard 73, he or she pays considerably more than the first value exchangedbetween the merchant 72 and the consumer 76 during the micropaymenttransaction, but this need not necessarily be the case. In any event,the first value should be greater than the second value, therebygenerating a first profit to the issuing entity 71 equal to thedifference between the first value and the second value.

After the payment is collected from the issuer 71 or other find-holdingentity, it is then routed to a clearinghouse entity 74 to facilitatesettling the micropayment transaction, as shown in block 104. The exactrelationship between the first value and the second value, and thus theprofit netted by the issuer 71 or other fund-holding entity, isnegotiated between that entity and the clearinghouse 74.

As shown in block 106, the clearinghouse 74 then transfers a paymenthaving a third value to the merchant 72 to settle the micropaymenttransaction. The second value should be greater than the third value,thereby generating a second profit to the clearinghouse entity 74 equalto the difference between the second value and the third value. Theexact relationship between the second value and the third value isnegotiated between the clearinghouse 74 and the merchant 72.

FIG. 11 illustrates an example micropayment transaction conductedbetween consumers 76 and merchants 72 in accordance with the invention.A card issue registration entity 104 generates card numbers, associatesa first time/currency exchange rate associated with the card numbers atthe time of generation, and feeds those numbers and rates into a cardregistration system 106. The first time/currency exchange rate isdetermined by dividing the minutes on a given card by the purchase priceof the card. A card holder registration system 102 tracks the valueremaining on each prepaid calling card and authorizes decrements onprepaid calling cards where the value remaining is greater than thevalue sought to be settled. Card registration system 106 serves as aninterface to both card issue registration entity 104 and card holderregistration system 102. Settlement system 108 interfaces with theissuing entity 71, merchant site 72, and the card registration system106. Issuing entity 71 has access to the card numbers generated by cardissue registration entity 104, and manufactures and sells the prepaidcalling cards.

In the example transaction illustrated, consumer 76 has purchased aprepaid calling card from issuing entity 71, who we assume still holdsthe funds resulting from that purchase. The consumer 76 then submits aproposed micropayment transaction for $1.00 US of goods/services withmerchant site 72. Merchant site 72 sends a request to authorize theproposed transaction to settlement system 108 and awaits the result.Settlement system 108 forwards the request to card registration system106, who in turn checks the time/currency conversion ratio associatedwith the prepaid calling card as obtained from card issue registrationentity 104. The time/currency conversion ratio determines how much timemust be deducted from the consumer's prepaid calling card to settle thetransaction. Settlement system 108 makes this calculation and sends tocard registration system 106 a request to decrement the consumer'sprepaid calling card by the calculated amount. Accordingly, cardregistration system 106 forwards to cardholder registration system 102 arequest to authorize decrementing the prepaid calling card by the amountof time that corresponds to $1.00 US of monetary value.

Cardholder registration system 102 authorizes this decrement request byexamining the value remaining on the prepaid calling card. To authorizethis request, the card holder registration system 102 may employ asecond minute/dollar conversion ratio, which may or may not be the sameas the first minute/dollar conversion ratio defined by card issueregistration entity 104. If the proposed transaction is authorized, cardholder registration system 102 decrements the prepaid calling card andsends a payment enable command to card registration system 106, who inturn relays this command to settlement system 108. The proposedtransaction is now authorized and is allowed to execute to completion.The next step is settlement, which may or may not occur immediatelyafter the transaction completes. At settlement time, the card issuer 71forwards, for example only, $0.98 to the settlement system 108. Theforwarding of $0.98 results in a $0.02 profit for the card issuer 71,since it received, on a pro rata basis, $1.00 from the consumer 76 whenhe/she purchases the prepaid calling card. Settlement system 108 thenforwards $0.95, for example only, to the merchant 72 to settle the $1.00transaction with consumer 76. In this example, the net effect ofsettlement to the merchant 72 is a nominal $0.05 loss, which may beconsidered the transaction cost associated with conducting themicropayment transaction with consumer 76. However, the merchant canadjust the retail price of his goods/services relative to his wholesalecost so as to offset the $0.05 transaction cost associated with thetransaction thereby generating a net profit nevertheless.

Method of Settling Micropayment Transactions

FIG. 12 is a flowchart illustrating a method 120 of settling amicropayment transaction conducted between a consumer 76 and a merchant72 using a prepaid calling card 73 presented by a consumer 76. In anillustrative embodiment, the method 120 comprises the following steps.As shown in block 122, a request is received from the merchant 72 toauthorize a proposed micropayment transaction for a first value. Inblock 126, the authorization request is processed. Depending on theresult of this processing, the method responds to this authorizationrequest by providing an authorization decision, as shown in block 126.The proposed micropayment transaction is then dispositioned as shown inblock 128.

The step 122 of receiving a request can include receiving data includingat least a calling card number and a PIN associated with the prepaidcalling card 73, along with a predefined command representing anauthorization request, and the transaction value to be authorized.However, if the consumer 76 obtained the prepaid calling card 73 througha club membership, then this data may include a club identifierassociated with such club. The step 124 of processing the authorizationrequest can include, for example, the processing flow illustrated inFIG. 5 at blocks 50, 51, and 53, and as described in the textaccompanying that figure.

FIG. 12A is a flowchart illustrating a processing flow performed duringthe response step 126 illustrated in FIG. 12. At evaluation block 126 a,the method determines whether the value remaining parameter issufficient to authorize the micropayment transaction requested in block122. If the value remaining parameter is sufficient, then the methodcommunicates an authorization message to the requesting process, and thetransaction proceeds to disposition step 128. Otherwise, the methodcommunicates a decline message to the requesting process, and thetransaction proceeds to disposition step 128.

FIG. 13 is a flowchart illustrating a first processing flow performedduring the dispositioning step 128 shown in FIGS. 12 and 12A. If thetransaction is authorized as shown in block 126 b of FIG. 12A, then thevalue remaining parameter is decremented in block 132, and thetransaction is settled by transferring a payment to the merchant asshown in block 134.

FIG. 14 is a flowchart illustrating a second processing flow performedduring the dispositioning step 128 shown in FIGS. 12 and 12A. If thevalue remaining parameter is less than the first value, then theresponse step 126 communicates a decline message, as shown in block 126c. In this case, the step 128 of dispositioning the micropaymenttransaction can include terminating the micropayment transaction, asshown in block 144. A second alternative shown in block 146 is to enablethe consumer to recharge the prepaid calling card by increasing thevalue remaining parameter after the micropayment transaction has beendeclined for settlement. A third alternative, shown in block 148, is toenable the consumer to purchase a second prepaid calling card having asecond value remaining parameter greater than the first value.

According to various aspects of the invention, the enabling steps 146and 148 can be performed by software hosted on a merchant website, or bysoftware hosted by a settlement clearinghouse. After the value remainingparameter has been increased by the consumer either recharging theprepaid calling card or purchasing a new prepaid calling card, themerchant can submit a second request to authorize the proposedmicropayment transaction, as shown in block 149.

The step of processing can include exchanging between a unit of valueused to conduct the micropayment transaction and a unit of valueassociated with the prepaid calling card. The step of exchanging caninclude converting between units of time and units of monetary currency,or converting between two different units of monetary currency.Preferably, the steps 124 and 126 of processing and responding areperformed in real time.

As discussed above, the step of transferring a payment can includeoriginating the payment either directly or indirectly to the merchantfrom an issuing entity that issued the prepaid calling card to theconsumer. More generally, the settlement payment can originate with anyentity holding the settlement funds, whether that entity be the entitythat originally issued the prepaid calling card, a settlementclearinghouse that holds the settlement funds on deposit, or any otherthird party that holds the funds.

The step of transferring a payment can include aggregating multiplemicropayment transactions involving prepaid calling cards issued by agiven calling card issuer into a composite settlement transaction to besettled against the given calling card issuer. This step can be extendedto include aggregating multiple micropayment transactions involvingprepaid calling cards issuer and involving a given merchant into acomposite settlement transaction to be settled against the given callingcard issuer.

FIG. 15 is a flowchart illustrating a processing flow 150 executed whilethe method of the invention processes a request to increment the valueremaining parameter associated with a given prepaid calling card.According to various embodiments of the invention, the merchant canrequest the clearinghouse to increment the value remaining parameter ofa prepaid calling card presented by a given consumer, as shown at block152. For example, if the consumer conducts a specified type oftransaction on a website associated with the merchant, then the merchantmight submit such a request. Continuing this example, the merchantwebsite might host a gaming application, and if the consumer transactswith the gaming application and achieves a score that reaches athreshold, the consumer might earn bonus value units to be applied tohis/her prepaid calling card.

The merchant website might set the bonus threshold statically at somepredetermined value that applies uniformly to all consumers accessingthe website. Alternatively, the merchant website might set this bonusthreshold dynamically for a given consumer depending on parametersassociated with that given consumer. For example, under the terms of aloyalty or incentive program offered by the merchant, the bonusthreshold for consumer A might be a score of 1000, while the bonusthreshold for consumer B might be a score of 10,000.

Accordingly, the merchant would request that a corresponding increase beapplied to the value remaining parameter associated with the consumer'sprepaid calling card, as shown at block 152. In this manner, theconsumer can earn a “pay off” by earning a given score on the merchant'sgame application. At block 154, the request to increase is processed,typically by validating a PIN or other password against the prepaidcalling card to be incremented. At block 156, the value remainingparameter is incremented. The processing shown in blocks 152, 154 and156 is performed by the clearinghouse 74.

Although the gaming application is listed here as an example, thisaspect of the invention is not limited to gaming applications. Merchantscould offer various types of incentives to consumers who conductmicropayment transactions at the merchants' sites. For example,merchants could offer specials on specific goods and/or services, suchthat if a consumer purchases those goods/services, the consumer receivesbonus value units to be applied to his/her prepaid calling card. Also,the merchant could offer loyalty programs, whereby if a given consumerpurchases a given quantity of goods/services, that consumer qualifiesfor discounts on future purchases or receives bonus value units to beapplied to his/her prepaid calling card.

FIG. 16 is a flowchart of a processing flow 160 performed duringactivation of a prepaid calling card. The method of the invention canalso be extended to activating the prepaid calling card in response toan activation request from a prepaid calling card issuer, as shown atblock 164. The activating step enables the prepaid calling card to beused both for placing telephone calls and for conducting micropaymenttransactions with merchants. The activating step (block 166) isperformed after the consumer acquires the prepaid calling card (block162) for one of a cash payment, a credit card charge, a paper checkpayment, an electronic check payment, and for no charge. A merchantand/or issuer might offer the prepaid calling card to consumers free ofcharge as an incentive or promotion to drive web traffic to their sites.Also, the recharge or repurchase transactions referred to above can beexecuted by the consumer using the same payment methods. At block 168,the just activated prepaid calling card is entered into a database tosupport subsequent inquiry and transaction settlement

Various embodiments of the invention can include validating a type ofprepaid calling card presented by the consumer against the type ofmicropayment transaction sought by the consumer. Specifically, age orother restrictions may apply to certain micropayment transactionsoffered by a given merchant site, and those restrictions can bereflected in the types of prepaid calling card issued by issuers of theprepaid calling cards. In these embodiments, the process illustrated anddiscussed above in connection with FIG. 4 is employed to validate theproposed micropayment transaction.

The invention also provides a program storage device 129 (see FIG. 12)readable by a machine, embodying a program of instructions executable bythe machine to perform the above method steps for settling amicropayment transaction conducted between a consumer and a merchantusing a prepaid calling card presented by the consumer. The programstorage device can include any magnetic, optical, or semiconductor basedtechnology suitable for storing computer data, whether such technologyinvolves either volatile or non-volatile storage media. Such media caninclude, but are not limited to, magnetic hard or floppy disks drives,optical media or CD-ROMs, and semiconductor-based memory technology,whether implemented in read-only or random access memory.

The method of the invention can be implemented using any number ofprogramming languages, scripting or markup languages, or otherenvironments, including but not limited to C, C++, Visual Basic, HTML,Java, or the like.

User Interface

FIGS. 17 and 18 are block diagrams of user interfaces 171 and 181,respectively, provided according to the invention. The inventionprovides computer-implemented user interfaces 171 and 181 that supportexecution and settlement of a micropayment transaction conducted betweena consumer and a merchant using a prepaid calling card presented by theconsumer. In an illustrative implementation, the web portal 209accessible over the Internet would host these interfaces 171 and/or 181at a Uniform Resource Locator (URL) address that could be printed on theback of the prepaid calling card. By referring to the back of theprepaid calling card and accessing the web portal 209, the consumer canperform any of the functions described below relating to the prepaidcalling card.

As would be understood by those skilled in the art, the various fieldsand sub-fields described below operate to accept data input from theconsumer. In an illustrative embodiment of the invention, the mainfields can be implemented as a button or other graphic user interface(GUI) icon, with the sub-fields accessible from forms that pop-up afterthe consumer clicks on the main icon. However, other implementations maybe suitable in different applications. According to the embodiment ofthe invention shown in FIG. 17, the user interface 171 comprises thefollowing.

A field 172 enables the consumer to view the transaction historyassociated with their prepaid instrument or card, for example byentering a card number and PIN. The system supports this function byrouting the data input though field 172 through communication channel176, to the CPU 177, which in turn accesses database/history file 178 toretrieve the requested transaction history.

A field 173 is adapted to receive data enabling the consumer to purchaseadditional value units for the prepaid calling card. This increment maybe purchased, or possibly obtained free of charge, by any of the meansdiscussed above. The field 173 may include additional sub-fields tohandle entry of the prepaid calling card number and associated PIN,along with any other information needed to increment the value remainingparameter.

The field 173 could be augmented to receive data enabling the consumerto obtain at least a first prepaid calling card. The exact content ofthis data and the structure of the field 173 as augmented would dependon how the consumer is obtaining the prepaid calling card. As discussedabove, the consumer can obtain the prepaid calling card for free, or fora payment tendered using several different methods. The interface canprovide a variety of different sub-fields depending on the paymentoptions offered by the entity hosting the interface. For example, if thehosting entity accepts credit cards, the field 173 would includesub-fields for entering credit card numbers, expiration dates,transaction amounts, etc. If the hosting entity accepts electronicchecks drawn against a consumer's checking account, then the field 173would include subfields for entering ABA routing numbers, accountnumbers, transaction amounts, etc. If the prepaid calling card is givento the consumer for free as part of a loyalty or rewards program, thenthe field 173 might contain a sub-field for an account number associatedwith such programs. Other possible payment options include, but are notlimited to, debit card authorizations, cash, and paper check.

A field 174 is adapted to receive data enabling the consumer to checkthe balance remaining on his/her prepaid calling card, that is toinquire about a value remaining parameter associated with his/herprepaid calling card. The interface provides sub-fields to handle entryof the prepaid calling card number and associated PIN, along with anyother information needed to access the value remaining parameterassociated with the given prepaid calling card.

A field 175 lists web sites associated with merchants who accept datafrom the prepaid calling card to conduct micropayment transactions. Byaccessing this field 175, the consumer can identify those web merchantsthat accept the prepaid calling card for micropayment transactions.

Turning to the embodiment show in FIG. 18, user interface 180 providesadditional fields 182, 183 and 184. The field 182 lists merchants orother affiliates who are offering incentives to consumers who use theprepaid calling card to conduct micropayment transactions at merchantwebsites. The field 183 lists a ratings system for merchant websitesthat accept data from the prepaid calling card to conduct micropaymenttransactions. This rating system can be an age-based system similar tothe ratings system applied to movies, as commonly known, or anotherratings system as may be appropriate in a given application. Finally,the interface can include the field 184 for advertising banners or thelike to generate revenue for the web portal 209.

As would be understood by those skilled in the art, the interfaces 171and 181 as described above serves as a front-end to a database, historyfile, or other suitable data structure 178 that stores the transactionhistory, remaining value parameter, prepaid calling card number, and PINassociated with a given prepaid calling card. The database, historyfile, or other suitable data structure 178 can also list merchantwebsites that accept the prepaid calling card, as well as lists ofmerchant websites that offer incentives to consumers using the prepaidcalling card to conduct micropayment transactions. These interfaces 171and 181 can be implemented using any number of programming languages,scripting or markup languages, or other environments, including but notlimited to C, C++, Visual Basic, HTML, Java, or the like. The variousfields shown in FIGS. 17 and 18 collect data from the consumer andtransmit that data through a communication channel 176 to a centralprocessing unit (CPU) 177, which couples the respective user interfaces171 or 181 to the database 178.

FIGS. 17 and 18 show illustrative embodiments of user interfaces 171 and181. However, it is understood that the layout, names and configurationof the fields and subfields described above may be varied as appropriatefor a given application without departing from the scope of theinvention.

FIG. 19 a is a diagram of a homepage 190 accessible from an illustrativemerchant website 72 provided according to the present invention. Thehomepage 190 includes introductory text 190 a and a link 72 a to thehomepage 190, a link 72 b to a selection of photos available to theconsumer, a link 72 c to a selection of articles available to theconsumer, a link 72 d to a selection of games available to the consumer,and a link 72 e enabling the consumer to access the portal 209 shown inFIG. 19. As understood by those skilled in the art, the consumer canaccess the material associated with each link 72 a-72 e by, for example,clicking on a selected link with an input device such as a mouse.

FIG. 19 b is a diagram of an illustrative webpage 191 accessible fromthe homepage 190 shown in FIG. 19 a, should the consumer select the“Photos” link 72 b shown therein. This webpage 191 lists a series ofphotos links, such as photo link 72 f, from which the consumer mayselect, along with prices charges for each photo.

FIG. 19 c is a diagram of an illustrative webpage 192 accessible fromthe webpage 191 shown in FIG. 19 b, should the consumer select, forexample, the photo link 72 f shown therein. Photo link 72 f isassociated with, for example, a photo entitled “West in San Antonio”.The webpage 192 presents the title and price of the photo, and theconsumer can click the “Continue” button to confirm the purchase. Asshown, the webpage 192 also pulls and presents data associated with theconsumer's prepaid instrument. This data could include parameters suchas units available on the instrument, the price of each unit, and thecorresponding monetary value associated with the instrument. This datacould also include the price of the item under consideration, and themonetary balance and unit balance that would remain on the instrumentshould the consumer conclude the proposed purchase.

FIG. 19 d is a diagram of an illustrative webpage 193 accessible fromthe homepage 190 shown in FIG. 19 a, should the consumer select the“Articles” link 72 c shown therein. Similar to the webpage 192 shown inFIG. 19 c, the webpage 193, presents the title and price of the selectedarticle, and also presents the data pulled from the consumer's prepaidinstrument. The webpage 193 also illustrates how a round-up function maybe applied to the units removed from the consumer's instrument, in thisexample, 11.5 units ($1.15 divided by $0.1 per unit) are rounded up to12 whole units.

FIG. 19 e is a diagram of an illustrative webpage 194 accessible fromthe homepage 190 shown in FIG. 19 a, should the consumer select the“Games” link 72 d shown therein. Similar to webpages 192 and 193, thewebpage 194 presents the title and price of the selected game, and alsopresents the data pulled from the consumer's prepaid instrument,

FIG. 19 f is a diagram of an illustrative webpage 195 accessible fromthe homepage 190 shown in FIG. 19 a, should the consumer select the“Portal” link 72 e shown therein. Should the merchant website 72 and theportal 209 be hosted by different entities (for example, the merchantsite and the clearinghouse site), the link 72 e would redirect theconsumer between the two sites as known by those skilled in the art.Otherwise, the consumer would remain on the same site to access webpage195. The webpage 195 includes a link 172, which corresponds to field 172shown schematically in FIGS. 17 and 18, that enables the consumer toaccess transaction history associated with the consumer's instrument.Link 174, which corresponds to field 174 shown schematically in FIGS. 17and 18, enables the consumer to access balance(s) associated with theinstrument(s) held by the consumer. Link 173, which corresponds to field173 shown schematically in FIGS. 17 and 18, enables the consumer to addunits to the instrument. Link 175, which corresponds to field 175 shownschematically in FIGS. 17 and 18, lists those sites that accept prepaidinstruments to conduct micropayment transactions. Link 182, whichcorresponds to field 182 shown schematically in FIG. 18, lists vendorsthat offer incentives or are otherwise affiliated with the prepaidinstrument or calling card program. Link 183, which corresponds to field183 shown schematically in FIG. 18, lists the site and card ratingsystem, should such system be implemented in a given application of theinvention.

FIG. 19 g is a diagram of an illustrative webpage 196 accessible fromthe webpage 195 shown in FIG. 19 f, should the consumer select the “ViewTransaction History” link 172 shown therein. Webpage 196 can generallylist debits and credits associated with each instrument number held bythe consumer, along with detailed parameters associated with each debitand credit.

FIG. 19 h is a diagram of an illustrative webpage 197 accessible fromthe webpage 195 shown in FIG. 19 f, should the consumer select the “ViewBalance” link 174 shown therein. As shown, webpage 197 presents theinstrument number, the units available on the instrument, the monetaryvalue per unit, and the resulting monetary value on the instrument.

FIG. 19 i is a diagram of an illustrative webpage 198 accessible fromthe webpage 195 shown in FIG. 19 f, should the consumer select the “AddUnits to Card” link 173 shown therein. As shown, webpage 198 presentsthe consumer with a plurality of fields receiving payment informationfrom the consumer. Respective fields are provided to receive, forexample, the number of the instrument to be “recharged”, the amount toadd to that instrument, the name, number, and expiration date of acredit card to which to charge the fee associated with the recharge.

The previous description set forth a set of illustrative embodimentsintended to facilitate understanding of the invention by those skilledin the art. However, this description is not intended to limit theinvention, as those skilled in the art will recognize that thisdescription can be varied, modified, and/or extended to otherapplications within the scope and spirit of the invention. Accordingly,the scope of the invention should be determined from the claims appendedhereto.

1. A method of settling a micropayment transaction conducted between aconsumer and a merchant using a prepaid instrument presented by aconsumer, the method comprising the steps of: receiving a request fromthe merchant to authorize a proposed micropayment transaction for afirst value to be settled against the prepaid instrument; processing therequest; responding to the request with an authorization decision; anddispositioning the proposed micropayment transaction based on valueunits associated with a specific merchant ID, a monetary conversion ratefor the value units, and a commission due the merchant for selling thevalue units.
 2. The method of claim 1, wherein the step of receiving arequest includes receiving data including at least a prepaid instrumentnumber and a PIN associated with the prepaid instrument.
 3. The methodof claim 1, wherein the step of receiving a request includes receiving arequest to authorize a proposed micropayment transaction for a firstvalue to be settled against a prepaid calling card.
 4. The method ofclaim 1, wherein the step of processing the request includes accessing adatabase to retrieve the value remaining parameter, using the data fromthe prepaid instrument as an index into the database, and comparing thevalue provided by the merchant to the value remaining parameter todetermine whether to authorize the micropayment transaction forsettlement.
 5. The method of claim 1, wherein the step of processingincludes determining that the value remaining parameter is sufficient toauthorize the micropayment transaction for settlement.
 6. The method ofclaim 1, wherein the step of responding includes one of authorizing theproposed micropayment transaction for settlement and declining theproposed micropayment transaction for settlement.
 7. The method of claim1, wherein the step of dispositioning the micropayment transactionincludes decrementing the value remaining parameter according to thefirst value, and transferring a payment to the merchant to settle themicropayment transaction.
 8. The method of claim 7, wherein the step oftransferring a payment includes originating the payment to the merchantfrom an issuing entity that issued the prepaid instrument to theconsumer.
 9. The method of claim 8, wherein the step of originating thepayment includes transferring the payment from the issuing entitydirectly to the merchant.
 10. The method of claim 8, wherein the step oforiginating the payment includes transferring the payment from theissuing entity indirectly to the merchant through at least oneintermediary.
 11. The method of claim 8, wherein the step oftransferring a payment includes aggregating multiple micropaymenttransactions involving prepaid instruments issued by a given instrumentissuer into a composite settlement transaction to be settled against thegiven instrument issuer.
 12. The method of claim 8, wherein the step oftransferring a payment includes aggregating multiple micropaymenttransactions involving prepaid instruments issued by a given instrumentissuer and involving a given merchant into a composite settlementtransaction to be settled against the given instrument issuer to thegiven merchant.
 13. The method of claim 1, wherein the step ofprocessing includes determining that the value remaining parameter isinsufficient to authorize the micropayment transaction for settlement.14. The method of claim 13, wherein the step of dispositioning themicropayment transaction includes, after the micropayment transactionhas been declined for settlement, enabling the consumer to perform oneof: increasing the value remaining parameter, and purchasing a secondprepaid instrument having a second value remaining parameter greaterthan the first value.
 15. The method of claim 14, wherein the step ofenabling is performed by software hosted on a merchant website.
 16. Themethod of claim 14, wherein the step of enabling is performed bysoftware hosted by a settlement clearinghouse.
 17. The method of claim14, further comprising the step of receiving a second request from themerchant to authorize the micropayment transaction.
 18. The method ofclaim 17, wherein the step of receiving a second request from themerchant is performed after the value remaining parameter has beenincreased.
 19. The method of claim 17, wherein the step of receiving asecond request from the merchant is performed after the second prepaidinstrument has been purchased.
 20. The method of claim 1, wherein thestep of dispositioning the micropayment transaction includes terminatingthe micropayment transaction.
 21. The method of claim 1, wherein thestep of comparing includes exchanging between a unit of value used toconduct the micropayment transaction and a unit of value associated withthe prepaid instrument.
 22. The method of claim 21, wherein the step ofexchanging includes converting between units of time and units ofmonetary currency.
 23. The method of claim 21, wherein the step ofexchanging includes converting between two different units of monetarycurrency.
 24. The method of claim 1, wherein the steps of comparing andresponding are performed in real time.
 25. The method of claim 1,further comprising the step of receiving from the merchant a request toincrement the value remaining parameter.
 26. The method of claim 25,wherein the step of receiving the request to increment results from aconsumer transaction conducted on a website associated with themerchant.
 27. The method of claim 25, wherein the step of receiving therequest to increment occurs in response to a consumer transactionconducted on a website associated with the merchant, the website hostinga gaming application, and the request to increase resulting from theconsumer transacting with the gaming application and achieving a scorethat reaches a predetermined threshold.
 28. The method of claim 1,further comprising the step of activating the prepaid instrument inresponse to an activation command from a prepaid instrument issuer. 29.The method of claim 28, wherein the step of activating the prepaidinstrument enables the prepaid instrument to be used both for placingtelephone calls and for conducting micropayment transactions withmerchants.
 30. The method of claim 29, wherein the step of activating isperformed after the consumer acquires the prepaid instrument for one of:a cash payment, a credit card charge, a paper check payment, anelectronic check payment, and for no charge.
 31. The method of claim 1,further comprising the step of incrementing the value remainingparameter in response to a recharge transaction executed by the consumerusing one of: a cash payment, a credit card charge, a paper checkpayment, an electronic check payment, and for no charge.
 32. The methodof claim 1, further comprising the step of validating a type of prepaidinstrument presented by the consumer against the type of micropaymenttransaction sought by the consumer.
 33. A program storage devicereadable by a machine, tangibly embodying a program of instructionsexecutable by the machine to perform method steps for settling amicropayment transaction conducted between a consumer and a merchantusing a prepaid instrument presented by the consumer, the method stepscomprising: receiving a request from the merchant to authorize aproposed micropayment transaction for a first value; comparing the firstvalue to a value remaining parameter associated with the prepaidinstrument; responding to the request with an authorization decision;and dispositioning the proposed micropayment transaction based on valueunits associated with a specific merchant ID, a monetary conversion ratefor the value units, and a commission due the merchant for selling thevalue units.